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Chemicals and the Economy

Companies remain cautious on the outlook

The good news is that the stabilisation seen in Q2 has been maintained. But companies remain cautious on the outlook, to judge from Q3 reports. CEOs are sceptical about the impact of government stimulus efforts in the West, and fear demand will fall back as these end. The only optimists are in China and India. […]

The banks’ plumbing systems appear to be blocked

The blog’s favourite financial journalist, Gillian Tett, has written an excellent article summarising the similarities between today’s problems in the western banking system, and those of Japan’s during the ‘lost decade’ of the 1990’s. Her point is that although central banks are pouring money into the system via ‘quantitative easing’, it is clearly not reaching […]

Dow aligns US ethylene balances

Capacity closures are always hard to achieve in the petchem industry: • First, these are a ‘zero sum game’ – if I shut my plant, then other producers gain in terms of overall operating rates and margins, at my expense • Secondly, there is the integration issue. Closing a consuming plant also impacts output from […]

Boom/Gloom Index rally continues

Last month, the blog introduced its new Boom/Gloom Index, designed to track sentiment in financial markets. The chart above now updates it to reflect the whole of June. The Index has continued to move up, and is close to the levels last seen in October 2007. Equally remarkable is the performance of the Green Shoots […]

Ineos talks of PetroChina deal for Grangemouth

The ‘Falkirk Herald’, based close to Ineos’s Grangemouth facility in Scotland, is not normally the place that the blog would look for news of the potential sale of a major part of the world’s 4th largest chemical company. However, that is what happened today, when the ‘Herald’ reported that Grangemouth site manager Gordon Grant had […]

Dow, Ineos, focus on debt issues

Dow and Ineos are two of the world’s largest chemical companies. Both found themselves in tight financial situations at the start of the year. Dow’s debt rating was cut to just above junk, whilst Ineos had to ask for covenant waivers. Since then, Dow has moved to tackle its debt issues very energetically. First it […]

Dow’s Morton sale shows it can still negotiate

The blog still finds it hard to adjust to Dow Chemical’s current financial status, following the K-Dow/Rohm & Haas episode. But facts speak for themselves. Earlier this week, S&P lowered Dow’s debt rating to just above junk grade, on completion of the R&H deal. However, news that Dow has sold R&H’s Morton Salt to Germany’s […]

Dow pays $78.97/share for Rohm & Haas

The blog has always had enormous respect for Dow. This was due to their ability to manage unconventional risks, in a way that other chemical companies (such as the blog’s former employer, ICI), found impossible. Even when things went wrong, they always had a Plan B, which allowed them to exit on a sensible basis. […]

Arise, Sir Evil?

Apparently its not just Jim Cramer who is less than happy with the current performance of Dow CEO, Andrew Liveris. The New York Times notes that merger arbitrageurs on Wall Street have started to spell his surname backwards, and re-christened him accordingly.

Resilience, team-work, key to survival

Last week, the blog spent 2 days at Wilton in the UK, one of the world’s largest and most integrated chemical manufacturing sites. It also contains some of the world’s major companies, including SABIC, Dow, INEOS, Huntsman and Lucite. The mood was downbeat, as one would expect with operating rates at historically low levels. Critically, […]

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